Should I look for a new property manager?

Question

I am new to real estate investing. I have one rental property that’s located in Norfolk VA. I believe my current property manager is horrible with communication. Sometimes it takes weeks to hear back from her (if she responds before I ask a 2nd - 3rd time). Also I had to remind her to ask the tenants about renewing their lease. They are not so we need to put the house back up for rent. It’s been over 2 weeks and she still hasn’t done it. Also the property manager said she had someone install closet shelves (I paid for) when the tenants first moved in. But about a month ago she tried to bill me again for them because they never installed them about a year ago and said “the tenants have been asking for these to get done”. I know property managers have their hands full and operate on small profit margins and I don’t expect her to cater to my ever need but I feel like the lack of communication really frustrates me. Maybe you guys can give some insight.

Nathan Gesner · Answer

Yes, this sounds like an awful property manager that should be fired. They should respond to all communication within 24 hours, even if they just send a quick note to tell you they need a few more days.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

David Vaughn · Answer

My honest opinion is I prefer to manage my own. Every time I have decided to do a property manager I have quickly regretted it. I have about 55 doors I'm looking after and run a full time construction company as well as a landlord website so I can assure you I don't do it because I have free time laying around But i do have much more of a handle on what's going on in my property. I have also learned that If i have a property manager now not only and I trying to avoid getting take advantage of by the tenants but in many cases the property manager as well.

Drew Sygit · Answer

@Kyle Johnson sounds like you hired one of the 70% of PMC's that are small mom & pop, and while honest, are NOT organized.

So, an owner still suffers from their incompetence!

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator.

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊

Bruce Woodruff · Answer

I would move on from this one....just rude if nothing else...

Piper D. · Answer

I would find someone else.  The lack of communication would do it for me.  Having to check in once is one thing, having to ask 2-3 times is unacceptable.  I only have a few properties and used a large property mgmt firm when I first started.  They were horrible about communication and getting my properties rented.  They also billed me for services not performed (I don't think they were intentionally trying to swindle me but more that the office staff was disorganized with their record-keeping).

My current manager is excellent. A coworker recommended him.  He operates on a smaller scale, but he communicates with me promptly.  If I contact him I hear back within one business day, but usually before that.   He screens well, has found me high-performing tenants, and any turnovers have been smooth.  By the time I even realize a lease renewal is coming up, he has probably already talked to the tenant and has a game plan ready if the house needs to go back on the market before he even calls me. I literally worry about nothing!

Life is too short.  The whole reason you're using a PM is so you dont have to deal with the property yourself.  I would move on.

Ash S. · Answer

Same is my experience. More layers you add - cost and troubles only add. If you ask a property manager how many properties they are managing - there is no straight forward answer. The reason being they are doing a lot of other work like managing other properties and other work(multiple jobs during pandemic).

Ricardo R. · Answer

@Kyle Johnson move and find some else… on the next one:

1) Focus on services and processes first! then…

2) Focus on price

Not the other way around… hope this helps.

Bjorn Ahlblad · Answer

Find a new PM. Start by looking in the NARPM directory and check references and feedback. What you are looking for is everything your current PM is not!

Theresa Harris · Answer

Property managers can be busy, but this is their job.  If the lease is ending, I'd find a new PM and explain to the current one that you are finding a new PM as you haven't been happy with her lack of communication and being double billed for things that she said were done and never were.  People make mistakes from time to time, but the repeated lack of communication is a big problem.

Should I look for a new property manager?

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